North Star Steel Arizona will pay a record fine of $7.75 million after reaching a settlement with the state because it exceeded its emissions from its Kingman-area plant, the Arizona Attorney General's office reported Friday.
The attorney general's office on behalf of the Arizona Department of Environmental Quality settled civil environmental violations in which North Star Steel agreed to $5 million in civil fines and $2.75 million to pave roads in Golden Valley to reduce dust.
The parties reached the settlement through a consent judgment filed Friday in Maricopa County Superior Court.
The penalty is the largest environmental civil fine ever collected by the state acting on its own and the largest fine ever for air quality violations from a single facility, according to a press release from the attorney general's office.
The settlement also requires North Star Steel to publish an apology in a local newspaper and have its president or other high-ranking officer apologize for the company's actions to the Kingman City Council and the Mohave County Supervisors.
North Star also has to hire an independent agency to conduct annual audits and conduct audits of its plants in other states.
"This is a very good settlement that sends a message to polluters that we will take action when they engage in the kind of practices North Star Steel did," Attorney General Janet Napolitano told the Miner.
"And we won't necessarily wait for the federal government to catch up.
We will act as a state to protect our state's environment."
North Star Steel acknowledged in a press release that the civil complaint alleged that the company obtained the wrong permit for its steel-recycling mini-mill, exceeded the air emissions limits of that permit, failed to report the installation and operation of certain additional equipment and did not test its equipment in a timely manner.
North Star, owned by Minneapolis-based Cargill, opened the plant in 1996 off the Shinarump Drive exit of Interstate 40.
The settlement is "fair and equitable," North Star Steel spokesman Greg Lauser said.
"We obviously regret and are embarrassed by the failures of the Kingman plant to live up to our standards of excellence and environmental stewardship."
Asked whether any North Star Steel officials would be disciplined, Lauser said, "We don't think pointing fingers would help.
Overall, we have an outstanding group of employees."
Asked whether the settlement would affect ongoing layoffs, Lauser said, "The reductions in the staff that have occurred in the past do not relate at all to this, and we do not anticipate future ones at this point."
North Star announced in early May that it was laying off an additional 45 employees because of escalating electricity costs.
The company has about 160 employees.
"There were mistakes made and some of our decisions were flawed," Lauser said.
However, he said, "We know that the testing of air emissions at this facility that there has never been harm or a threat of harm to the people of the area or the environment."
Lauser supplied results from independent testing that shows emissions from carbon monoxide, nitrogen oxides, particulates (dust) and sulfur dioxide were below the thresholds set my the consent order from ADEQ and the national standards, which are less stringent than the consent order.
Testing conducted in 1998 found that North Star Steel had been emitting pollutants at 15 to 50 times the permit levels, according to the press release from the attorney general's office.
While odorless and colorless, carbon monoxide is a poisonous gas that robs blood of its ability to deliver oxygen.
Nitrogen oxide gases cause severe damage to lung tissue and create gases that harm the environment.
However, the fact that emissions were below the federal threshold saved North Star Steel, said Mitchell Klein, assistant state attorney general.
"They were facing considerable more penalties," he said.
The situation came about because North Star Steel and a competitor, Birmingham Steel were in a race to build a steel recycling plant that would serve the Southwest, according to the press release.
In its application, North Star claimed to be a minor source of air pollution.
Minor-source plants do not have to undergo the lengthy and costly process of getting a major-source permit, but a steel mill must keep its emissions of carbon monoxide and nitrogen oxides below 100 tons per year.
North Star received a permit first, and Birmingham Steel abandoned its plans.
North Star began building the plant in 1994 and started melting steel in 1996.
In its minor-source application, filed in 1993, the company claimed that it would meet the standards by limiting steel production through the use of a new technology that would destroy most of its projected carbon monoxide emissions, according to the press release.
Other methods were to reduce emissions from nitrogen oxides during the melting process.
The company was to begin testing its emissions within six months, but continually put off the testing, the press release stated.
An investigation conducted by the attorney general's office and ADEQ revealed that the minor-source application was inaccurate and misleading.
North Star also failed to operate a device designed to control carbon monoxide emissions, according to the press release.
The company also conducted internal tests indicating that its emissions never complied.
The investigation determined that compliance with the permit would be impossible.
North Star is working on obtaining a major-source permit, the press release concluded.